By Nate Scherer, American Consumer Institute Policy Analyst

The Trump administration has taken actions to halt work at, and potentially even abolish, the Consumer Financial Protection Bureau (CFPB). However, these actions have overshadowed a recent rush of dangerous new agency rulemaking that would grant the federal government more control over consumer financial data.

Late last year, the CFPB proposed a rule to expand the application of the Fair Credit Reporting Act (FCRA) and Regulation V to additional uses of consumer information. Data brokers would be regulated like credit reporting agencies under the FCRA, and credit reporting agencies would be restricted from using specific consumer data for marketing purposes — activities that ultimately help allocate credit to businesses and consumers. 

The arbitrary expansion of the FCRA increases compliance costs for data brokers and credit reporting agencies, but it is also a heavy-handed government mandate that will inhibit the necessary usage of data to correctly compile credit reports, ensure reliability and liquidity in the U.S. credit markets, and prevent fraud.

Fortunately, Trump’s decision to fire the CFPB director, Rohit Chopra, means that the new rule is unlikely to be finalized and may even be repealed. However, it is incumbent upon the acting CFPB director to avoid mimicking Chopra’s interventionist policies and instead choose to pursue beneficial reforms. These could include welcoming fintech partnerships and promoting technology and innovation to benefit consumers.

The CFPB also finalized a rule  in January prohibiting specific uses of medical debt. Under the rule, banks and credit unions would be restricted in how they can use medical debt when issuing credit, while credit reporting agencies would be restricted in how they can use medical debt in credit reports. The dearth of information could limit the availability of credit of all kinds to low-income and historically marginalized people. 

In response, Congress should introduce a joint resolution of disapproval under the Congressional Review Act to nullify the rule and prohibit regulators from issuing any future rule that is substantially similar.

Read the full story in DC Journal.

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